Singapore Air: Open Letter to SQ Mgt - Call on Your Loyal Customer Base and Raise up to $37 Billion
Singapore Airlines (SIA SP) is in dire straits. According to Bloomberg reports the company has burned through 50% of the capital (6.4 billion USD!) it raised less than two months ago. SIA's stock price is at its lowest level since 1998 and its financial health is precarious.
In the memoirs of the great Lee Kuan Yew we read about the founding of Singapore Airlines and how it was always instilled into management to be profitable from year one. SQ listened to their mentor and has been profitable for most of their existence.
SQ is a unique asset, critical for the connectivity of Singapore but due to Covid-19 is facing a daunting set of challenges beyond their control.
Open Letter to Management:
The current pandemic puts SQ in survival mode. Bondholders and shareholders have been tapped just a few months ago but capital is literally being incinerated. This is unsustainable.
All hope is not lost.
We feel strongly the airline has not tapped its most valuable asset: millions of its loyal fans. Knowing that the Singapore government will not let Singapore Airlines fail these fans are willing to open their wallet and show their love for SQ.
Virtually everyone who has flown SQ will appreciate the airline for its great service and attention to detail. Sure, SQ is always priced at a premium but so is their service offering.
Given the extreme circumstances, we urge SQ management to call on its most important asset:
their customers.
Give your customers a chance to help you by making an attractive offer. Below we will demonstrate (using moderate assumptions) how the airline could raise anywhere between 2.47 to 37 billion SGD in funding from its private and corporate customers.
Should this be considered it would be wildly beneficial to SIA shareholders/bondholders as it would eliminate another round of highly dilutive funding. It would also be a real show of love to your customers and be highly appreciated. It would strengthen your communication with your fans who can then eagerly await the day skies re-open and SQ can show these customers their legendary service once again.
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